Section D

AN 16A The following information relevant to accounts receivable is presented for Dommar Company in thousands of Accounts Receivable Allowance for Doubtful Accounts Net Credit Sales 2018 $319 19 4,377 2017 5422 1B 3.598 2016 S500 20 2.937 Required Calculate the accounts receivable turnover ratio for the years 2017 and 2018 ART = net credit Sales & average net accounts recievable (net accounts recievable tatal accounts rec.-allowance F.D.A) 2017 : 35982 (422-134501-20:21 : 81 times 2018 =4377 [3101 -10 +422-18 + 2] = 12,4 times b) Calculate the days' sales outstanding for the years 2017 and 2018. 365 & ART. Day Sales outstanding 2017= 365+ 8.1 = 48 days 2018 = 365 12.4 = 29 days On January 2, 2019, Dommar Company agreed to sell $200.000 of its accounts receivable with a 7% fee paid to the factor. Why do you think a company would pay a factoring fee to sell its accounts receivable? selling accounts recienable to other parties who then collect them from customers allows a company to increase its cash flow quickly d) Prepare the journal entry to record the factoring of accounts receivable in part c), Date Account Title and Explanation Debit Credit Danz ton